Montag, 29. November 2010

A federal watchdog is investigating whether a senior
Securities and Exchange Commission official bungled an examination
associated with a "major" investment adviser enforcement case
in 2009.

The senior official at one of the SEC's regional offices
allegedly told staffers not to pursue certain red flags in an investment
adviser examination, according to a report by SEC Inspector
General David Kotz.

Kotz's semi-annual report to Congress, released on Monday,
did not identify the senior official, the regional office or the major
enforcement case.

The senior official was motivated to cover up his tracks
because he was deeply involved in the prior examination that did not
uncover the fraud, according to an internal complaint
received by Kotz.

The report from Kotz comes as the SEC continues to rebuild
its reputation after the regulator was blasted for missing Bernard
Madoff's epic fraud despite numerous tips and complaints.

The SEC declined comment. Kotz would not elaborate further.

According to the report, the complaint also alleged that a
hostile work environment existed in the regional office because
management failed to discipline the senior official after it
was revealed that he had viewed porn on a SEC computer.

According to the report, Kotz is still eyeing allegations
that the enforcement division was negligent in an investigation of an
insider trading case. Among other things, Kotz is also
probing allegations that SEC staff failed to properly investigate a
prominent law firm for obstructing an ongoing case.

Mittwoch, 10. November 2010

Newly released documents detail 12 years of fits and starts
at the Securities and Exchange Commission as financier Allen Stanford
was allegedly running a global Ponzi scheme.

At one point, an SEC official laments in an e-mail, "Before I
retire, the Commission will be trying to explain why it did
nothing." The e-mail from Fort Worth, Texas, Regional Office
Assistant Director Julie Preuitt was written in 2004. The agency
did not move in on Stanford until 2009.

The documents are exhibits in a scathing report issued in
March by SEC Inspector General H. David Kotz. His investigation found
SEC staffers were aware of potential problems at the Stanford
Financial Group as far back as 1997, but that the SEC's Enforcement
Division repeatedly declined to take action. The agency
released the exhibits Tuesday after repeated requests by CNBC under the
Freedom of Information Act.

Kotz's investigation also found the SEC's former enforcement
chief in Fort Worth, Spencer Barasch, repeatedly sought to represent
Stanford after leaving the agency, even after being told by
the SEC's ethics office that he could not.

The exhibits show Allen Stanford himself pushed for Barasch's
hiring. With SEC investigators bearing down on the company in 2006,
Stanford wrote in an e-mail to Chief Financial Officer James
Davis and General Counsel Mauricio Alvarado, "The former SEC Dallas
lawyer we spoke about in St. Croix. Get him on board asap."

SEC officials blocked Barasch from representing Stanford, but
the documents show Barasch billed Stanford for work done in 2006.
He sought to represent Stanford again after the SEC lawsuit
in 2009, but officials again ruled he had a conflict of interest.
According to a transcript released Tuesday, Kotz asked
Barasch about the 2009 request, and Barasch replied, "Every lawyer in
Texas and beyond is going to get rich over this case. Okay?
And I hated being on the sidelines."

Barasch, who has not been charged with wrongdoing, has not
responded to previous requests for a comment about any role he may
have played in the Stanford affair.

The documents show Allen Stanford's attempts to exert his
influence may have extended beyond the SEC. In a 2004 e-mail exchange
with the subject "Stanford - Call to Federal Reserve," SEC
officials contemplate the fact that someone at Stanford - the name
in the e-mail is redacted - had contacted someone at the
Federal Reserve, whose name is also redacted.

The SEC staffers conclude there is nothing they can do about
the development, which leads Assistant Regional Director Preuitt to
write, "I love this stuff. We all are confident that there is
illegal activity but no easy way to prove. Before I retire, the
Commission will be trying to explain why it did nothing.
Until it falls apart all we can do is flag it every few years." The
e-mail is dated October 25, 2004.

By then, officials in Fort Worth had been looking into issues
at Stanford Financial for years. In 1997, examiners found evidence
of "possible misrepresentation and misapplication of customer
funds," according to one of the newly released documents. The
report noted that Stanford himself had made a $19 million
cash contribution to the company in 1996, and "We are concerned that
the cash contribution may have come from funds invested by
customers in (Stanford International Bank)."

The report was referred to the Enforcement Division, which
ultimately chose not to pursue the matter. Among those who made the
decision: regional enforcement chief Spencer Barasch.

The SEC released the Inspector General's report - minus the
exhibits - on April 16, the same day the Commission announced a
high-profile fraud suit against Goldman Sachs. That triggered
charges the SEC was trying to bury the report amid the publicity
surrounding the Goldman Sachs case, but a subsequent report
by the Inspector General found no evidence of that.

Montag, 8. November 2010

Bloodied and bruised, this is the shocking picture of
cricket tycoon Allen Stanford after a beating by jail inmates.

His neck in a brace, his eye bleeding and half-closed and his head bandaged.

The final humiliation for Stanford, 61, awaiting trial
accused of masterminding a $7 billion fraud, was his feet and hands were
shackled as he was taken to hospital.

Once he posed with a perspex case containing $20million at
Lord's cricket ground, after being hailed as the saviour of
English cricket.

But that counted for nothing at the private prison in Conroe near Houston, Texas, and the inmates sharing his cell.

"I was on the telephone and some of the other people in the
cell didn't like it," he told a friend who visited him, according
to the Sunday Times.

Attacked: The tycoon sits on a hospital trolley with his
neck in a brace, his eye half-shut and a bandage wrapped around
his head after the assault by jail prisoners in Texas

"They said something to me and then two of them jumped me and kept punching me and kicking me in the head."

"I lost consciousness, but at one time I came round and
grabbed one of them by the leg. That just set them off a again".

The guards burst into the cell and shackled Stanford before
taking him to a hospital where he underwent an operation while still
chained up.

Stanford suffered fractures to his eye socket, cheek bones and severe bruising to his body.

He has lost all feeling in the right side of his face. No
one has been punished for the attack and he spent three weeks in
solitary confinement, before being moved to another prison.

The assault happened in October last year in a cell holding
14 other men. It was designed to hold eight inmates and at the
time had no electricity, air conditioning and was in
virtual darkness.

The friend claimed the inmates were "on edge" with each other because of the cramped conditions.

Shackled: Allen Stanford is bound hand and foot at the hospital near Houston

Stanford, who faces 21 charges at his trial which begins in January, had made three requests to be moved to
another prison.

His downfall began after he signed a deal with the England and Wales Cricket Board in June 2008 for five Twenty20
international matches between England and a West Indies all-star XI with a prize of $20 million.

He was caught flirting with the wives and girlfriends of
England's cricketers and was seen to grab Emma Prior, wife
of wicket-keeper Matt and pull her onto his lap before
putting an arm round Alistair Cook's girlfriend.

An assessment of Stanford's health was prepared for a court by Victor Scarano, a forensic psychiatrist.

He wrote: "Mr Stanford described himself as a breathing
corpse with increased episodes of despair, hopelessness and
helplessness".